Nutmeg, Vanguard Lifestrategy or Ready-Made Portfolio?

Linton

One issue with keeping excess funds is that charges are normally made as a fixed amount per transaction. The more funds you hold the more transactions you need to make to keep them balanced. For example over a few years your VLS100 will probably increase in value significantly more than your lower % equity funds. To keep the whole portfolio at the VLS60 level you would need to sell some VLS100 and VLS80 and put the money into those lower % funds.

jdw2000

matt1983 wrote: »

My confusion was in not realising that the 5 vangaurds funds will be holding the same equities and bonds etc, so yes that means that i should have just put it all in the 60.

But as ive said, i didnt have/wont have to pay anything for having the 5 rather than just the one.

Can anyone see any other real issues with keeping my 5 vanguards or do you recommend closing 4 and putting all my money in the 60, which would be my chosen risk level.

Thanks again.

No, there's no reason not to keep all 5 at this stage. As and when you change provider, though, you will not want to transfer all 5 of them as this may incur 5 charges. You will therefore sell them and then buy what you want to buy with your new provider.


Another question you need to ask yourself at this point is whether they are income or accumulators. Unless they are in a SIPP or ISA you are better off having the "income" versions. I am pointing this out now because if you are about to sell/merge them then this is a good time to get the right type (income or accumulator). I wanted to change my own from accumulator to income and it involves selling and re-buying.

In an ISA/SIPP you do not have to declare earnings on your investments to the tax man. Dividends to you can therefore be paid into your investment as 'accumulations'. However, if your investments are not in an ISA or SIPP, and instead they are in a normal trading account, then you will have to know how much income they have generated. The easiest way to do this is to have the 'income' versions of the VLS products so that you can clearly see how much income has been generated for the purposes of showing the tax man. (You can pay this income back into your investment manually if you wish).

Fatbritabroad

matt1983 wrote: »

There isnt any extra charge for having more than one of the vanguards, i wouldnt have done it if there was.

Thanks for all the responses, has made things a bit clearer to me . . . As i said, i am new to this and things that seem obvious to some might need explaining to those with less experience.

I do think it will be interesting to see how the funds perform against each other, will make it a bit more exciting rather than just having the one at 60%.

Any recommendations on other funds i could add to my list?

The only thing you could add is those areas life strategy don't cover. Small companies and (I think correct me if in wrong) commodities?

ColdIron

matt1983 wrote: »

Can anyone see any other real issues with keeping my 5 vanguards or do you recommend closing 4 and putting all my money in the 60, which would be my chosen risk level.

I've just bought a shirt but I decided to get a bit of a small one, a bit of a medium one and a bit of a large one and stitched them all together. It looks a bit odd and one arm is a bit tight but the other one is surprisingly roomy. On average it seems to balance out but my wife refuses to be seen in public with me

Can anyone see any other real issues with keeping my Frankenstein shirt or do you recommend exchanging the arms for two medium ones and stitching them onto the medium chest, which would be my chosen shirt size

Don't forget it cost you nothing to buy the five funds and it won't cost you anything to sell them and buy the one you really want

AnotherJoe

matt1983 wrote: »

My confusion was in not realising that the 5 vangaurds funds will be holding the same equities and bonds etc, so yes that means that i should have just put it all in the 60.

But as ive said, i didnt have/wont have to pay anything for having the 5 rather than just the one.

Can anyone see any other real issues with keeping my 5 vanguards or do you recommend closing 4 and putting all my money in the 60, which would be my chosen risk level.

Thanks again.

Not right now, but if 60 is your chosen risk level, then quite quickly you will move away from that as they grow and fall at different rates. You are most likely away from that "60" level the day after you bought them even if only slightly.

After a year you could easily be at 50 or 70.

If you buy 60 then Vanguard automatically balance it for you to keep it at 60.

Fatbritabroad

Yes that's a really good point you've effectively diversified yourself out of rebalancing which was the main reason to buy lifestrategy in the first place

OldMusicGuy

Just to nitpick a bit, splitting your allocations across multiple VLS products isn't quite the same as picking one, because the allocations to sectors and countries varies a bit, so you may end up with a slightly different sector and geographic spread compared to just picking one fund like VLS60. But I suspect you didn't work out what the sector and geographic split would be across all five funds and decide that's better for you than the split of one fund like VLS 60..... ;-)

So ask yourself why did you think it was a good idea? If it was spreading risk, why did you you pick 5 funds from one provider? Wouldn't be better to at least consider different funds from different providers, maybe focused on different geographies? That way you actually spread the risk a bit wider, whereas picking 5 different VLS funds is pretty much the same as picking one VLS fund from a risk perspective.

I'm still learning at this game but I've found that reading a lot more about investing styles and retirement planning is helpful in avoiding the "oh those VLS funds look good and everyone seems to recommend them so I'll pick some of them" approach that us newbies can fall into. There are many good resources on this website that can help you learn more about your risk appetite, what you are planning to achieve and how you should invest accordingly.

Like jdw2000 said, you need to decide what level of risk appetite you have. The fact that you think picking 5 VLS funds is a good idea seems to imply you may not have worked that out yet. Like some of the most recent posters said, as the value of those funds changes your risk profile will actually be different unless you rebalance them.

chile_paul

ChesterDog wrote: »

If all else fails, use a food or sex analogy.

Fortunately, the food one worked...

:rotfl:

I would love to see anybody explain this with a sex analogy.....(and comply with the forum code of course)

Gadfium

chile_paul wrote: »

I would love to see anybody explain this with a sex analogy.....(and comply with the forum code of course)

Slow and steady?
Once you put it in don't be tempted to take it back out or shove it into different pots?
In it for the long game?

:D:D

Audaxer

AnotherJoe wrote: »

Not right now, but if 60 is your chosen risk level, then quite quickly you will move away from that as they grow and fall at different rates. You are most likely away from that "60" level the day after you bought them even if only slightly.

After a year you could easily be at 50 or 70.

If you buy 60 then Vanguard automatically balance it for you to keep it at 60.

While I agree with everyone that the OP should just have the one VLS60, I wouldn't have thought that having all 5 would get out of balance as they are all automatically rebalanced on an ongoing basis to keep their original percentage splits?